UK and US among 10 easiest countries to invest in. Brazil remains the most complex jurisdiction for setting up and running a business.

LONDON, June 28, 2022 /PRNewswire/ -- TMF Group, a leading provider of compliance and administrative services, has today launched the ninth edition of its Global Business Complexity Index (GBCI).

The comprehensive report analyses 77 jurisdictions, accounting for 92% of the world's total GDP and 95% of net global FDI flows, by comparing 292 annually tracked indicators, offering data on key aspects of doing business, including incorporation timelines, payroll and benefits, rules, regulations, tax rates, and other compliance factors.

The study confirms that the US, Denmark and Hong Kong are still among the top 10 easiest jurisdictions when it comes to doing business. They are joined by the UK (68^th position vs 53rd place in 2021), and Jersey, now in the 72^nd place. At the top of the rankings are the Cayman Islands (77^th) and Curacao (76^th).

The UK has ranked in the ten least complex countries for the first time. The ranking does not relate to trade barriers and any Brexit impacts that now apply. Its position is driven by a simple approach to business incorporation: there is no requirement for resident directors and set up can be achieved in as little as a day, meaning that international businesses can start full operations with ease. The UK is set to remain attractive in the future to compete with its European neighbours. One advantage to operating in the jurisdiction is a highly skilled talent base that is accustomed to working internationally and for foreign businesses.

The US maintains its ranking among the simplest jurisdictions. A key driver of simplicity is that the government actively looks to make it business friendly: in recent years corporate tax rates were reduced in an effort to increase investment. Thanks to its skilled workforce and clear global reach, the US will remain one of the most attractive jurisdictions for foreign businesses.

At the other end of the spectrum, Brazil once again tops the rankings as the most complex jurisdiction globally, followed by France. Mexico, Colombia, Bolivia, Turkey and Poland are still in the 10 least business friendly jurisdictions and are joined by countries where complexity has increased over the past 12 months: Italy (8^th position versus 15^th in 2021), Greece (6^th vs 13^th) and Peru (3^rd vs 24^th).

Key drivers of complexity in Brazil are the volume of regulatory changes each year, as well as the three layers of tax regimes to comply with – federal, state and municipality. Incorporating new companies, at 45 days much longer than most other countries, is a barrier as businesses deal with the three layers of regulation.

TMF Group CEO Mark Weil said: "We hope that the report will help investors pick and manage their destinations with greater confidence. Our message isn't to avoid investing in complex jurisdictions as these are often among the most attractive for talent and customer opportunities. Rather it is to invest with eyes open and ready to manage the rules that might otherwise put your licence to trade at risk".

Moreover, the report identifies key themes shaping the global business landscape and regulatory environment.

Emerging from Covid-19

The study reveals that some of the measures put in place such as tax exemptions, increasing employee rights and the acceleration of digital reporting are in the process of being reversed to pre-pandemic status.

Property tax payments on business premises reduced in frequency during the peak of the crisis. However, in 2022, 14% of jurisdictions require some or all companies to pay the tax at least every three months, compared to 9% of jurisdictions in 2021

On the HR (human resources) and payroll side, the trend for remote working has increased, to the point where it's legal or standard in most industries in 31% of jurisdictions, compared to 10% of 2020. The rise of remote working does have tax implications, however.

Certain HR-related benefits such health insurance (58%), childcare assistance (31%) and housing/social care contributions (27%) have increased compared to previous years. Companies are also required to submit reports and information related to equality, covering areas such as gender pay gap and disabilities, in more jurisdictions – up to 26% in 2022 from 9% in 2020.

Compliance and the flow of FDI

The report highlights a simultaneous growth in both complexity and the flow of FDI. Experts in a larger percentage of jurisdictions (34% in 2022 vs 28% in 2021) are predicting an increase in FDI over the next five years, reflecting post-pandemic optimism at investment opportunities.

Technology continues to play a role in both increasing and curtailing complexity. Digital literacy is an important factor, with 16% of jurisdictions automatically notifying all the relevant authorities following incorporation.

For businesses seeking to incorporate and operate across borders alignment is key, allowing them to operate similarly across multiple jurisdictions. Adoption of international standards such as CRS (86% of jurisdictions in 2022 vs 82% in 2020) and FATCA (82% vs. 76%) has been growing, reflecting a steady global move towards transparency.

ESG on the rise

ESG is becoming more of a focus for business globally. However, despite the increase in interest, legal enforcement of ESG practices is only in place for around 50% of the jurisdictions. This is especially the case outside the EU, demonstrating a lack of international alignment. The impact of ESG is therefore difficult to measure.

ESG is on the rise globally, with jurisdictions such as France leading the way for many years. However, many governments are at an early stage of their engagement by starting to look at adopting environmental initiatives and guidelines.

Top and bottom ten (1= most complex, 77= least complex)

1          Brazil

2          France

3          Peru

4          Mexico

5          Colombia

6          Greece

7          Turkey

8          Italy

9          Bolivia

10        Poland

68        United Kingdom

69        Norway

70        New Zealand

71        United States

72        Jersey

73        British Virgin Islands

74        Hong Kong

75        Denmark

76        Curaçao

77        Cayman Islands

About TMF Group

TMF Group is a leading provider of critical administrative services, helping clients invest and operate safely around the world. Our 9,100 experts and 120 offices in 85 jurisdictions worldwide serve corporates, financial institutions, asset managers, private clients and family offices, providing the combination of accounting, tax, payroll, fund administration, compliance and entity management services essential to global business success.

We work with 60% of the Fortune Global 500 and FTSE 100, and almost half the top 300 private equity firms, covering sectors as diverse as capital markets, private equity, real estate, pharmaceuticals, energy and technology.
TMF Group – we make a complex world simple. www.tmf-group.com 

SOURCE TMF Group